3.3.2.8. Article 3.7: Adjusting the 1990 Baseline

The second sentence of Article 3.7 of the Kyoto Protocol states:

Those Parties included in Annex B for whom land-use change and forestry
constituted a net source of greenhouse gas emissions in 1990 shall include
in their 1990 emissions base year or period the aggregate anthropogenic carbon
dioxide equivalent emissions by sources minus removals by sinks in 1990 from
land-use change for the purposes of calculating their assigned amount.

Article 3.3 specifies that carbon emissions and removals from ARD must be counted
during the commitment period but are not included in the general baseline. Article
3.3 creates the following two "anomalies":

Afforestation and reforestation allow credits to be gained during the commitment
period even though the same activity in 1990 did not lower the 1990 baseline.

Deforestation creates debits during the commitment period even though the
same activity in 1990 did not cause an increase in the 1990 baseline.

Article 3.7 rectifies these anomalies for some countries by including emissions
and removals from "land-use change" in the 1990 base year. The first part of
the second sentence in Article 3.7 ("Those parties.emissions in 1990") determines
to which countries the rest of the sentence ("shall include. assigned
amount") applies. Land-use change and forestry (which is assumed here to be
identical to LULUCF) was a net source in 1990 for all of these countries.

The second part of the second sentence of Article 3.7 ("shall include.assigned
amount") states that CO2-equivalent emissions by sources and removals by sinks
in 1990 that result from "land-use change" shall be included in the 1990 base
year. Parties may wish to clarify the nature of the linkage between Articles
3.3 and 3.7, particularly the scope and meaning of the term "land-use change"
in Article 3.7. Options include applying "land-use change" narrowly to conversions
between forest and non-forest (depending on whatever definition of "forest"
the COP may adopt) or applying "land-use change" more broadly to conversions
between, for example, the 15 categories listed in Table
2-1.

If ARD activities are defined as "land-use changes" (the IPCC, Flexible, Biome,
and Land Use definitional scenarios), the first option (applying "land-use change"
narrowly) counts carbon emissions and removals in 1990 from pre-1990 ARD activities
in the 1990 base year, thereby rectifying the two anomalies. Equivalence between
ARD in Article 3.3 and "land-use change" in Article 3.7 would be achieved under
this option (see the right column in Table 3-5).
Hence, for some countries a net-net approach for ARD is applied according to
Article 3.7: All ARD activities would be considered in the commitment period
and in the 1990 emissions base year. If ARD activities are not considered to
be limited to "land-use changes" (the FAO, Land Cover, and Aggradation/Degradation
definitional scenarios), equivalence between ARD in Article 3.3 and "land-use
change" in Article 3.7 is not possible.

The option of applying "land-use change" broadly would include ARD and land-use
conversions other than ARD under the term "land-use change." For countries with
a net source from land-use change and forestry in 1990, this approach opens
the possibility of using a net-net approach in the first commitment period for
activities in Article 3.4, provided these activities are defined as "land-use
changes."